Appellant's Control Panel addition to D.G. Sets qualifies as manufacture, entitling Cenvat credit. Invalid show cause notices.

The Tribunal held that the appellant's addition of a Control Panel to the D.G. Sets constituted further manufacturing, justifying the availed Cenvat credit. The Tribunal found that the sets received were enhanced and made marketable through additional processes, qualifying as manufacture under the law. Consequently, the show cause notices were deemed invalid, and the appeal was allowed with consequential benefits.

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Issues:
1. Admissibility of Cenvat credit on D.G. Sets transferred from trading unit to factory.

Analysis:
The main issue in this appeal was whether the appellants were justified in taking Cenvat credit on D.G. Sets transferred from their trading unit at Bangalore to the factory at Ghaziabad. The appellant, a manufacturer of excisable goods, received D.G. Sets from their sister concern at Bangalore on a stock transfer basis and availed Cenvat credit of the duty paid inputs. The Revenue alleged that the credit availed was inadmissible as the inputs were not used in further manufacturing. The appellant argued that they added accessories to the D.G. Sets, making them functional and marketable after undergoing processes at the factory.

The appellant contended that the D.G. Sets were received incomplete or in a non-operational condition and were subjected to further processes for completion, including the addition of Control Panel and other accessories, making them marketable. They relied on a Supreme Court ruling emphasizing that the process of manufacture continues until the product is rendered marketable. The appellant also argued that even if a new product was not manufactured, adding accessories and Control Panel and paying duty on a higher assessable value amounted to the reversal of Cenvat credit.

The Revenue, on the other hand, argued that the D.G. Sets received were complete packaged units with standard accessories, and there was no indication that they were non-functional. They pointed out that the trading unit from where the D.G. Sets were received was meant for trading purposes, strengthening the claim that the sets were for trading and not manufacturing. The Revenue disagreed with the appellant's claim of value addition through the addition of a Control Panel, stating that the dispute was related to the availment of credit on inputs or capital goods.

After considering the arguments and facts presented, the Tribunal found that the appellant had indeed done further value addition to the D.G. Sets by adding a Control Panel and testing them, which amounted to manufacture under the definition provided in the Act. Therefore, the show cause notices were deemed not maintainable in law, and the impugned order was set aside, allowing the appeal with consequential benefits.

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